Lebanon's State Council ruled Wednesday, July 18, that a longstanding conflict between the government and France Telecom's unit Cellis will be resolved at a Washington-based special arbitration authority.

Lebanon's highest judicial authority for administrative arbitrage, whose rulings cannot be appealed, said the dispute will be referred to the International Center for Settlement of Investment Disputes (ICSID), which is affiliated with the World Bank.

The council said the dispute could be taken to "a neutral special arbitration authority not belonging to any of the two signatory states." The council said the agreement applied to the cellular mobile telephone operator Cellis because it was a foreign firm, since 65 percent of its shares are owned by France Telecom.

However, it refused to grant international arbitration in a dispute between the state and the country's other mobile phone company LibanCell, since the majority of the firm's shares are Lebanese-owned.

The council was ruling on an August 2000 Lebanese government request to cancel contract clauses that allowed both Cellis and LibanCell to file arbitration requests with foreign authorities.

On June 14, the Lebanese government decided to tear up the 10-year Build-Operate-Transfer (BOT) contracts signed in 1994 with Cellis and LibanCell, who have been operating the country's GSM network. Earlier this month, the government pledged to pay indemnities to the two companies.

The Lebanese government has decided to auction off the lucrative cell phone licenses, giving the winning bidder a 20-year franchise. The bidding would also be open to Cellis and LibanCell.

A few years ago, Cellis and LibanCell started opposing government limits on the number of subscribers they could have and how much they had to pay the state for subsidiary GSM services not covered in the contracts.

The government was asking each firm to pay $300 million to increase their subscriber numbers. Contrary to what Cellis and LibanCell claimed, the government said the original contracts had a limit of 250,000 subscribers for each company. The government said the firms were operating a total of 800,000 lines." ― (AFP, Beirut)